The Role of Institutions in Growth and Development
Massachusetts Institute of Technology

Daron Acemoglu

Harvard University and Weatherhead Center for International Affairs

James Robinson

Abstract: In this paper we argue that the main determinant of differences in prosperity across countries are differences in economic institutions. To solve the problem of development will entail reforming these institutions. Unfortunately, this is difficult because economic institutions are collective choices that are the outcome of a political process. The economic institutions of a society depend on the nature of political institutions and the distribution of political power in society. As yet, we only have a highly preliminary understanding of the factors that lead a society into a political equilibrium which supports good economic institutions. However, it is clear that it is the political nature of an institutional equilibrium that makes it very difficult to reform economic institutions. We illustrate this with a series of pitfalls of institutional reforms. Our analysis reveals challenges for those who would wish to solve the problem of development and poverty. That such challenges exist is hardly surprising and we believe that the main reason for such challenges is the forces we have outlined in this paper. Better development policy will only come when we recognize this and understand these forces better. Nevertheless, some countries do undergo political transitions, reform their institutions, and move onto more successful paths of economic development. We also can learn a lot from these success stories.
JEL classification: O10, P10, P17 Keywords: economic growth, development,…...

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In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi
National Disability Pension Scheme for BPL beneficiaries, pension amount to be
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crore for capital expenditure. Any further requirement to be met.
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Armed Police Forces.
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next 2 years.
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References
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Carden, A. (2007). Christian Ethics, Formal Instiutions, and Economic Growth. American Review of Political Economy, 34-53.
Harreld, D. J. (2010, February 4). The Dutch Economy in the Golden Age (16th-17th Centuries). Retrieved January 5, 2012, from EH.Net Encyclopedia: http://eh.net/encyclopedia/article/Harreld.Dutch
Hodgso, G. M. (2006). What are Institutions? Jornal of Economic Issues, Vol. 40, No. 1.
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Kuran, T. (2003). Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation. Working Paper: Mercatus Center and University of Southern California.
Maddison, A. (2005). Growth & Interaction in the World Economy: The......

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